CFC #013 - Are Deadbeat Expenses Damaging Your Profits?Aug 05, 2023
"A penny saved is a penny earned."
As a business owner, you make decisions every day about where to spend your money.
From software subscriptions to marketing services, you invest in a variety of resources to support your operations and growth.
However, one common pitfall I've observed in my 15 years of working with businesses is the trap of deadbeat expenses.
These are recurring costs for services or resources that are not pulling their weight in your business.
They either aren’t fully used or aren’t generating a sufficient return.
As a result, they drain dollars from your business that could go elsewhere - like in your pocket.
Today, I want to focus on this issue and share strategies to help you optimize your business expenses and boost your bottom line.
Let's dive in!
3 Ways Underutilized Expenses Hurt Your Business
Underutilized expenses are a silent drain on your business. Here's why this is an issue:
- Increased Costs: Whether it's a premium software subscription that's barely used, or a high-end office lease when your team works remotely, underutilized expenses can needlessly inflate your operating costs.
- Profit Erosion: Every dollar spent on an underutilized resource is a dollar not contributing to your profitability. Over time, these costs add up and chip away at your bottom line.
- Opportunity Costs: The money tied up in underutilized expenses could be better spent elsewhere in your business, such as on initiatives that directly drive growth or improve efficiency.
4 Steps to Smarter Spending
Recognizing and addressing underutilized expenses can significantly enhance your profitability. Here are some strategies to consider:
- Examine Existing Expenses: Regularly review your expenses and identify any that aren't providing adequate value. This could range from unused software subscriptions, to overpriced service contracts, or even unused office space.
- Downgrade or Eliminate: If you find services or subscriptions that are seldom used, consider downgrading to a lower-cost plan or eliminating them entirely. Reallocate the funds saved to areas that can provide a higher return.
- Overhaul Operations: If you find services or subscriptions that could be better utilized, determine what procedures are needed to take full advantage of those items and warrant keeping the recurring expenses.
- Negotiate with Vendors: If certain services or subscriptions are necessary but either underutilized or generating low returns, try negotiating with vendors for a lower cost. This may not always yield lower costs, especially in times of high inflation and economic uncertainty, but it’s worth a shot.
How Can a Fractional CFO Help?
Identifying and addressing underutilized expenses is a crucial part of improving your financial efficiency. A fractional CFO can:
- Perform detailed reviews of your business expenses.
- Provide insights into potential areas for cost savings.
- Help you reallocate savings to high-impact areas in your business.
- Support vendor negotiations to secure better pricing.
I've spent the past 15 years helping business owners like you to optimize their expenses and uncover hidden savings to boost profitability.
What’s next? [Email & Website CTA]
Ready to stop your money from slipping down the drain and start optimizing your business expenses?
Looking for guidance?
Book a free strategy session here.
We can examine your current expense structure, discuss your goals, and determine if a fractional CFO might be the right move for your business.
Keep an eye out for more actionable insights and strategies to strengthen your business's financial health and reduce your stress.
Until next time!
In the meantime, if you’re looking for more, there’s a couple ways I can help you:
- Watch my free on-demand training on my 5-step system you can use to get the financial results you want from your business and feel less overwhelmed. Free training here.
- I can help free you from financial stress in your $1M+ services business and discover a faster route to the results you need for the life you want. Book a call here.